Newsletter Receive our weekly list of
3 Day Hammer Stocks
Three Day Hammer Trades &
The stock's listed in "Free
Email Newsletter" are not just recommendations.
These are stocks that I am presently buying and selling.
week, I will list the Three Day Hammer candidates. These are not
longs or shorts until the the stock moves above the buy stop (for
longs) or sell stop (for shorts). When you receive this list, you
enter an order to buy or sell short based on the recommended limit
order. If the order is filled, you place a stop loss as recommended.
- This is critical. Any failure of placing a stop loss can result in
catastrophic losses or at worse you can lose any profits that you made
from the last several days to months. Place the stop loss the moment
that you have been placed into the trade. If you are stopped out, take
the loss and move to the next trade. On average, you should have a
40-50% win ratio. You will have more number of losses than wins.
However, with careful money management, the dollars won will exceed
the dollars lost.
- Do not take any position where the stock gaps up $.25 for longs or
down $.25 for shorts. You may consider using a limit order of $.10
above (longs) or $.10 below (shorts).
Stops - If not
stopped out, move the stop order to $.10 under the low of the day for
the long Three Day Hammer Trades or $.10 above the high of the day for
the short Three Day Hammer Trades. Other
methods are to use the low from 2 days ago or a 10 Day Exponential
Moving Average. You an use a hard stop, meaning when the stop is hit,
you are out. Or an "After the Close" stop where if the stop is hit
during the day, you close the position on the next opening.
Stop Rule - on long trades, stops can never be lowered and on
short trades, stops can never be raised.
One Money Management - when we have a profit
equal to the risk factor, meaning that the stock has moved
profitably by the number indicated by the risk,
sell 50% of the position. You let the rest of the shares run
based on the trailing stop.
must determine their own risk factor. In general, it is foolish to
risk more than 1-2% of a portfolio in any one trade. And smaller might
be better, especially if you are new to trading. Determining the
number shares is relatively easy. For example: using a portfolio of
$50,000, a 1% risk and a listed risk factor of 1.15. You would place
at risk $500 (1% of $50,000). Divide the $500 by the risk factor
(1.15) and you arrive at +434 shares. Round this to the lowest hundred
for 400 shares. Place your order accordingly. However, this method,
while maximizing profits can involve severe drawdowns. Other methods
include purchasing an equal number of shares (say 500 shares at a
time) or equal dollar amounts of shares (such as $5,000 a trade).